Earnings: Levi Strauss |

Levi Strauss Sales Fall, But Profit Rises

NEW YORK (Reuters) - Jeans and casual pants maker Levi Strauss & Co. Tuesday said quarterly profit rose, helped by tax benefits and lower interest expenses, although sales fell.

The company posted a second quarter profit of $40 million, including a $32 million income tax benefit.

But revenue edged down 1 percent to $953 million, hurt by lower European and U.S. Levi Strauss Signature brand sales even as U.S. sales of the company's Levi's and Dockers improved.

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"We continue to transform our European business, and I'm optimistic that the region's revenue trends will improve during the balance of the year," Martineau said in a statement.

The company also saw a $10 million benefit from the early extinguishment of debt and lower interest expense.

Privately owned Levi Strauss reports financial results because of its outstanding debt.

SECOND HALF OPTIMISM

The company said it was "cautiously optimistic" for the second half of the year, making its prediction in set of slides that accompanied the securities filing. The slides, which also said the company would focus on improving profit and cash flow, were not more specific about the second-half outlook.

Levi, which announced last week the retirement of Chief Executive Philo Martineau at the end of the year, has warned of an "uncertain environment" in the marketplace in the first half of 2006 amid weak demand in Europe, declining sales at Wal-Mart Stores Inc. (WMT) and retail consolidation.

Earlier this year, Levi Strauss stemmed a sales slide that has dogged the company since 1997. In recent years, the company has closed factories, laid off workers and revamped its jeans and apparel to boost profit and win back customers.

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